When looking at DB plan providers, plan sponsors should question when they developed their software and how easy it is to enhance it, according to Gallagher. She adds that consultants who were around when DBs were dominant can do searches for industry standards using market research—they don’t necessarily use requests for proposals (RFPs). “Most plan sponsors benchmark their providers when contracts are up for renewal to see what else is in the marketplace,” Gallagher states.
She also says looking at fees is important, noting that some DB plan sponsors are surprised that fees aren’t reduced when they freeze their plans.
For those DB plan sponsors that want to do all or some plan administration in-house, there are still providers that offer technology solutions for internal use, Gallagher adds.
“Identify what you want and what firm can help you achieve that,” Ayor says.
He suggests plan sponsors look for depth of knowledge—a provider that knows DB plans and the client’s type of DB plan. In addition, sponsors should look at a provider’s technology. What is the plan sponsor looking to provide for participants? He adds that plan sponsors should question the type of fees a DB provider charges.
Ayor suggests flexibility is important for plan sponsors. “The one area we do see those comprehensive services provided to the mid-market is through insurance companies. But a lot of the plans they service are frozen, and ultimately the insurance company is looking into selling annuities. They are asset accumulators. If plan sponsors don’t want to be tied to a product, they need to look for a provider that is not tied to product,” he says.
“Some DB plan providers are getting out of the business; others are investing to make enhancements. This is good for plan sponsors as well as recordkeeping of these plans, and it improves participant satisfaction. It is an efficiency game,” Gallagher concludes.